Unlocking the Secrets to Successful Multifamily Deal Sourcing via Brokers

In large multifamily deals, it's not customary to go direct to seller. People who do direct to seller campaigns for these type of assets almost always get sorted into a single family or small multi buyer who doesn't have much experience with deals this size. This is a sure way to burn bridges with brokers in the area. With deals 100+ units and up being limited in the quantity of them, it's a small community. Follow the industry standard of going through a broker, even for off market deals. The relationships and reputation among the brokers will be one of your best resources. Without it, it will be tough to succeed. It's an "unfair business" in a lot of ways according to Michael Becker with SPI Advisory.

Sourcing Deals Direct From Brokers

This in my opinion is the best way to find good deals. Brokers often do have a list of their best buyers and send them their deals first. However, next is usually an email blast to their general list. Then listing it on their website. Then listing it on free websites if they do that at all.

To get on their exclusive list, you already have to be an established player in the industry and have closed deals without drama.

To get on the general list, you first find property listings online. Then you get the operating memorandum (OM) and scroll to the bottom. There, you'll see a list of all the brokers and sometimes financial staff on the deal with their contact info.

When you're getting started, reach out to the junior brokers.

If you're already established and know you can close deals, you're just breaking into a new market, then reach out to either the Junior or Senior Brokers.

The Junior brokers will generally be listed towards the bottom. The Senior brokers will generally be listed towards the top.

You can email the brokers who you are, what you've done, and what specifically you're looking for.

Sometimes using industry dialect can help your credibility. Some common ones are:

Vintage: What year the property was built

Buy box: Your deal criteria

Asset Class: A, B or C Class assets

Distribution list: What the brokers call the list of people they have to send deals to

Don't say you're looking for a certain cap rate. So many variables affect cap rate and it's a beginner thing to say. See my ebook on the resource tab on the 1e9 Capital website for why you shouldn't buy off cap rate alone.

First email to brokers template:

Hello [Name],

I'm a multifamily investor and have done X deals. I'm looking for multifamily deals to buy in [market] and want to be added to you distribution list. My buy box is 1970s vintage or newer, value add, 100 units or more. I can do B or C class assets, but not A. If you know of anything, let me know.

Thanks,

[Your name]

[Phone Number]

Extras:

Once the broker responds, add them on social media.

When they do send you deals, actually look at them in depth. Give them respectful feedback to why you do or don't want to move forward.

If you want to treat the brokers you work with with a trip or dinner, make sure it's a super quality place. Don't try to give trinket gifts etc.

Being consistent with your word is probably the most important thing in the industry. If you say you're going to do something, do it. Don't let the people you work with down by not doing what you say. When you do that, it hurts everyone's reputation involved. However, even worse than this is bringing your investors into a deal where they lose money. If you made a mistake and the deal doesn't work, always choose your investors interest and withstand the blow of your personal reputation from walking away.

With these broker relationships, don't focus on only doing one deal with them. Focus on creating a long term relationship with the broker over an entire career.